Cutting a cheque for $15,000 might be hard to swallow for a foreign entrepreneur launching a bootstrapped startup in Canada.
But would that price tag be easier to digest if it came with the enticement of a fast track to permanent residency?
Vancouver’s Spring Activator began making that offer in July to foreign applicants to its global impact accelerator program. It’s using the country’s Start-up Visa (SUV) program to lure foreign entrepreneurs to Canada to launch innovation-focused businesses.
But immigration lawyers say it’s still unclear whether the SUV program fixes problems with the now-scrapped – and often controversial – federal immigrant investor program.
“I was opposed to this thing at the embryonic phase,” Vancouver immigration lawyer Richard Kurland told Business in Vancouver.
He said when the the former Conservative government launched the SUV program in 2013, there were too many ill-defined rules and a lack of transparency for both process and outcome.
“The Start-up Visa began to gather numbers only since last year,” Kurland said, adding that the government processed about a half-dozen cases in the first few years after its creation.
“Does it work? Don’t know; there’s no data.”
He said it would likely take about four years until enough data has been gathered from the program’s outcomes to determine whether it’s been effective.
Most accelerator and incubator programs take equity stakes in early-stage companies in exchange for capital and guidance in developing business models and expanding revenues.
The SUV program offers foreign entrepreneurs the ability to move into Canada and gain permanent residency by securing either a minimum $200,000 from a designated Canadian venture capital fund or $75,000 from a designated Canadian angel investor group.
The third option is for an applicant to be accepted into a business incubator like Spring’s, which charges applicants $15,000 for its four-month accelerator program. Spring also takes 2% of the company in the form of options that vest over four years. Spring said its program would reduce the wait time for permanent residency to an average of five months.
But permanent residency is no guarantee, because applicants must still pass Immigration, Refugees and Citizenship Canada screening.
“It [SUV] just seemed like the right vehicle for us to use to really put a call out for applicants who could be anywhere and who are impact businesses,” said Spring chief impact officer Sana Kapadia.
The first cohort of applicants, which is expected to arrive in the fall, must all be involved in enterprises that have a positive effect on the globe in realms such as clean technology, health care or sustainability.
Kapadia said the startups must also be beyond the “idea stage” – either operational in their home country or having other “points of validated proof of traction.”
Meanwhile, Vancouver-based accelerator Launch Academy started its own immigrant entrepreneur initiative in June using the SUV program.
CEO Ray Walia said in an email that his organization would not charge foreign entrepreneurs or take an equity stake in the company.
“The caveat is that it is only available for companies and founders that have a pre-existing relationship with Launch Academy, meaning that our staff know the company and founders and have worked with them through one of our programs,” he said.
“This is mandatory so that we can qualify the companies that we would be vouching for during the Start-up Visa program and immigration process.”
Spring Activator and Launch Academy are the only Vancouver-based business incubators designated by the federal government to participate in the SUV program. Immigration lawyer Bruce Harwood of Boughton Law Corp. said he has received just two inquiries about the SUV program.
“We have stayed away from it basically because my sense of it was the British Columbia provincial [nominee] program for entrepreneurs is a stronger program for persons who wanted to live in British Columbia,” Harwood said.
While Harwood had speculated that Ottawa might scrap the SUV program, federal Innovation Minister Navdeep Bains announced July 28 that the government was making it permanent.
The B.C. provincial nominee program has a few key differences.
Applicants must have a personal net worth of $600,000, make a personal investment of at least $200,000 in a business and create at least one new full-time job for a Canadian citizen or permanent resident in that business.
The now-defunct federal immigrant investor program required applicants to have a net worth of $1.6 million and commit to making an $800,000 investment.
Kurland said if different levels of government want to get better results than any of these programs, they should consider allowing B.C. to have an immigrant investor program similar to Quebec’s.
He said the B.C. government should allow an annual allotment of 300 immigrant investors to each pay between $1 million and $1.5 million to be placed on a fast track to permanent residency.
The investors would be required to live in the province and file taxes. Failure to meet requirements would strip them of their permanent residency status.
The $300 million to $450 million raised annually through the program would not have to be split down the middle with Ottawa as with the previous federal program. Instead, the money would go to building seniors’ care facilities across the province.
“Elder care facilities are tightly regulated federally, provincially, municipally, and so you can’t play games,” he said. Asked about the potential for introducing a Quebec-style immigrant investor program to the province, BC NDP spokeswoman Marielle Tounsi told BIV in an emailed statement that the new government is “going to look closely at current government programs as well as those adopted by other governments so that we can improve our level of service and help build a better B.C.” •